Unformatted text preview: from the bond (sinking)
fund trust ($60,000) and the net long-term capital gain ($8,000) is taxable (trust) income to Andi Corp., in
Choices "a", "b", and "c" are incorrect, per the above rule. CPA-02239 Type1 M/C 118. CPA-02239 A-D Nov 91 II #47 Corr Ans: D PM#24 R 3-99 Page 15
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Becker CPA Review, PassMaster Questions
Lecture: Regulation 3 In the case of a corporation that is not a financial institution, which of the following statements is correct
with regard to the deduction for bad debts?
a. Either the reserve method or the direct charge-off method may be used, if the election is made in the
corporation's first taxable year.
b. On approval from the IRS, a corporation may change its method from direct charge-off to reserve.
c. If the reserve method was consistently used in prior years, the corporation may take a deduction for a
reasonable addition to the reserve for bad debts.
d. A corporati...
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- The Land, Taxation in the United States, Educational Development Corp, Type1 M/C, Corr Ans